True Ventures Invests in Digital Assets with Homeland Security Expertise

Growing Interest in Crypto and True Ventures' Approach

An increasing number of investment companies are monitoring activity on cryptotwitter, though True Ventures isn't prominently among them, according to co-founder Jon Callaghan. Similar to their approach with hardware, synthetic biology, and other sectors where True has achieved successful early investments, the firm’s involvement with digital assets began in 2014.

This initial entry was largely driven by founders they had previously supported, who were progressively venturing into this evolving digital landscape. A significant portion of True’s portfolio companies are now focused on this area. Callaghan states that 55 out of the 388 founders within the “active” True Ventures portfolio are presently engaged in digital asset development.

The Risks and Rewards of Decentralized Investments

Investing in tokens, protocols, and DAOs – decentralized autonomous organizations lacking central leadership but governed by community-defined rules – carries inherent risks. However, this element of risk is intentionally embraced. Callaghan, like many early investors in this space, anticipates that a willingness to take substantial risks will ultimately yield significant returns.

He draws a parallel between investing in decentralized assets and traditional venture capital, but with a crucial distinction. The firm prioritizes evaluating individuals, then the market, and finally the technology itself.

Navigating the Unique Structure of Digital Assets

With digital assets, a new dimension emerges: the structure, which differs substantially from conventional investments. While some deals involve standard equity, True may also acquire rights to token sales. Tokens themselves can vary, potentially including governance rights, voting privileges, or specific vesting schedules and lock-up periods.

However, these features aren't always present. Recognizing the complexities, True Ventures has recently appointed Gus Coldebella to concentrate on global public policy and regulation.

Strengthening Regulatory Expertise

Coldebella previously served as the general counsel and chief compliance officer at Paradigm, a crypto-focused investment firm currently establishing a substantial new fund. Prior to that, he held the position of chief legal officer at Circle, a digital currency company, for over a year.

Crucially, Coldebella brings extensive experience from his time as chief legal officer at the U.S. Department of Homeland Security, maintaining valuable relationships with regulators. This network proves invaluable when navigating investments in digital assets.

Building a Comprehensive Crypto Team

Coldebella’s primary responsibility at True will be assisting the firm and its portfolio companies in understanding and adapting to evolving regulations. He will collaborate closely with the firm’s existing crypto team, which includes partner Adam D’Augelli, associate John O’Connell, Dave Balter – founder and CEO of crypto analytics platform Flipside Crypto – and entrepreneur and True partner Kevin Rose, host of the “Modern Finance” podcast.

He will be responsible for keeping a wide range of individuals informed. True Ventures has already invested in several related projects, including the digital asset protocols Ampleforth and Reflexer (creator of Rai Protocol), the trading platform FutureSwap, Art Blocks (a project generating artwork on the Ethereum blockchain), and infrastructure software like that offered by Forta.

Addressing the Fundamental Question of Venture Participation

The central question Coldebella will help True address is how a venture firm can participate intelligently and securely in an ecosystem that doesn’t conform to the traditional company structure. This is a challenge not only for True Ventures and its funds, but also for regulatory bodies like the SEC and governments worldwide, as Callaghan points out.